- Capital and Interest
"Capital and Interest" is a three-volume work on
financepublished by Austrian economist Eugen von Böhm-Bawerk.
The first two volumes were published in the 1880s when he was teaching at the
University of Innsbruck.
The first volume of Capital and Interest, titled "History and Critique of Interest Theories" (1884), is an exhaustive survey of the alternative treatments of the phenomenon of
interest: use theories, productivity theories, abstinence theories, and many more.
In this work Böhm-Bawerk built upon the
time preferenceideas of Carl Menger, insisting that there is always a difference in value between present goods and future goods of equal quality, quantity, and form. Furthermore, the value of future goods diminishes as the length of time necessary for their completion increases.
Böhm-Bawerk cited three reasons for this difference in value. First of all, in a growing economy, the supply of goods will always be larger in the future than it is in the present. Secondly, people have a tendency to underestimate their future needs due to carelessness and shortsightedness. Finally,
entrepreneurs would rather initiate production with goods presently available, instead of waiting for future goods and delaying production.
Also included was a critique of Marx's
exploitation theory. Böhm-Bawerk argued that capitalists do not exploit workers; they accommodate workers – by providing them with income well in advance of the revenue from the output they helped to produce.
Böhm-Bawerk's "Positive Theory of Capital" (1889), offered as the second volume of Capital and Interest, elaborated on the economy's time-consuming production processes and of the interest payments they entail. Book III, Value and Price, built on Menger's Principles to present a distinctly Austrian version of
In an example, a pioneer farmer had five sacks of grain, with no way of selling them or buying more. He had five possible uses - as basic feed for himself, food to build strength, food for his
chickens for dietary variation, an ingredient for making whisky, and feed for his parrots to amuse him. Then the farmer lost one sack of grain. Instead of reducing every activity by a fifth, the farmer simply starved the parrots as they were of less utility than the other four uses – in other words, they were on the margin. And it is on the margin, and not with a view to the big picture, that we make economic decisions.
"Further Essays on Capital and Interest" (1921) was started as appendices to the second volume, but appeared as a third volume.
All three volumes were recently published together as a bound set by
Libertarian Press. Libertarian Press's edition was translated by Hans Sennholzand first published in 1959.
Ludwig von Mises Institutemade available in 2007 the William Smart translations as "Capital and Interest", "The Positive Theory of Credit", and "Recent Literature on Interest".
* [http://www.econlib.org/library/BohmBawerk/bbCI.html Capital and Interest by Eugen von Böhm-Bawerk] London: Macmillan and Co. 1890, trans. William A. Smart, 1890. Library of Economics and Liberty (Econlib).
* [http://socserv2.socsci.mcmaster.ca/~econ/ugcm/3ll3/bawerk/Capital/index.html Capital and Interest by Eugen von Böhm-Bawerk]
* [http://www.econlib.org/library/BohmBawerk/bbCI.html The Positive Theory of Capital by Eugen von Böhm-Bawerk] London: Macmillan and Co.. 1891, trans. William A. Smart, 1891. Library of Economics and Liberty (Econlib).
Wikimedia Foundation. 2010.
Look at other dictionaries:
capital and interest — ▪ economics Introduction in economics, a stock of resources that may be employed in the production of goods and services and the price paid for the use of credit or money, respectively. Capital in economics is a word of many meanings … Universalium
Loans and interest in Judaism — The combination of loans and interest, in Judaism, is a complicated and detailed subject. The biblical Hebrew terms for interest are neshekh (Heb.: נשך), literally meaning a bite , in reference to its painfulness to the debtor, and marbit /… … Wikipedia
capital — capital1 capitalness, n. /kap i tl/, n. 1. the city or town that is the official seat of government in a country, state, etc.: Tokyo is the capital of Japan. 2. a city regarded as being of special eminence in some field of activity: New York is… … Universalium
interest — /in teuhr ist, trist/, n. 1. the feeling of a person whose attention, concern, or curiosity is particularly engaged by something: She has a great interest in the poetry of Donne. 2. something that concerns, involves, draws the attention of, or… … Universalium
capital — [[t]kæ̱pɪt(ə)l[/t]] ♦ capitals 1) N UNCOUNT Capital is a large sum of money which you use to start a business, or which you invest in order to make more money. Companies are having difficulty in raising capital... A large amount of capital is… … English dictionary
capital gains tax — n [C, U] (in Britain) a tax on the profits people make from selling investments (= things in which they have invested money), such as shares or property. * * * Tax levied on gains realized from the sale or exchange of capital assets. Though… … Universalium
Interest — Interest † Catholic Encyclopedia ► Interest Notion of interest Interest is a value exacted or promised over and above the restitution of a borrowed capital. ♦ Moratory interest, that is interest due as an indemnity or a… … Catholic encyclopedia
Capital, Volume I — is the first of three volumes in Karl Marx s monumental work, Das Kapital, and the only volume to be published during his lifetime. Originally published in 1867, Marx s aim in Capital, Volume I is to uncover and explain the laws specific to the… … Wikipedia
Capital employed — has many definitions and is not easily analysed. In general, it represents the capital investment necessary for a business to function. Consequently, it is not a measure of assets, but of capital investment: stock or shares and long term… … Wikipedia
Capital, Volume III — Capital , Volume 3, subtitled The Process of Captialist Production as a Whole was prepared by Friedrich Engels from notes left by Karl Marx and published in 1894. It is in seven parts [cite book|title=Capital Vol3.|isbn=0 7178 0490… … Wikipedia